Difference between Investment Bank and Commercial Bank

The banking segment is divided into two main divisions that are investment banking and commercial banking. Investment bank is the bank having all setup with the end goal of closing commercial transactions but commercial bank is the bank having all setup to give services to the investors.  These two banks are not same but there exists a difference between these banks. In this article the contrasts between these banks are explained, which help the individuals to understand the main differences between these banks.

 Investment Bank

The investment bank is utilized to characterize a finance related establishment that executes complicated financial transactions. These banks interface the enormous companies with investors. The banks offers its clients in various ways such as helping government and organizations in issuing securities, offering the speculators in purchasing stocks, some assistance with bonding, and so on giving counseling services etc. The banks get its earning by charging fee for its consultative services. These banks assume a vital part in supporting organizations or government to take all around arranged choices and increase funds effortlessly.

 Commercial bank

The commercial bank alludes to a foundation which is busy with giving financial and banking related services to the general population. In prior times, there was no that kind of organization where individuals can deposit their cash securely or take advances. Later on, banks are developed that fills in as a financier to every one of the nationals of the nation. Commercial banks are possessed privately or publicly or by the blend of the two. The banks provide assist in the mobilizations of funds over the economy. The banks acknowledge deposits from the natives of the nation at nominal interest rate and utilize that cash in stretching out credit to different clients, charging more rate of interest from them

Investment Bank VS Commercial Bank

  • Meaning:

Investment bank alludes to the financial institution, that provides services such as brokerage services, underwriting of securities and so forth.

Commercial bank refers to a bank that gives services such lending money, accepting deposits and so forth.

  • Manage:

Investment bank manages the selling and buying of stocks, investments, bonds and help different companies to go people with different offers.

Commercial bank mostly manages the accounts include deposits or saving and provide loans to businesses or individuals.

  • Service:

Investment bank provides customer specific services.

Commercial bank provides standardized services.

  • Customers:

Investment bank has fewer customers that are only few hundreds.

Commercial bank has more customers that include millions of individuals or businesses.

  • Based on:

The performance of investment bank usually based on financial and stock market performances.

The performance of a commercial bank usually based on demand for credit and country’s economic growth.

  • Risk:

Investment bank can be said as more risk tolerance because of business model and weakness of government instruction to this bank.

Commercial bank can be said as less risk tolerant because of more government instructions and its duties.

  • Earnings:

The earning of investment bank comes from profit or commission on trading activities and fees.

The earning of commercial bank comes from interest and fees.

Conclusion

From the above article we can end up with the main points that are investment bank alludes to the financial institution, that provides services such as brokerage services, underwriting of securities and so forth while commercial bank refers to a bank that gives services such lending money, accepting deposits and so forth. Investment bank manages the buying and selling of bonds and stocks but commercial bank manages the accounts and gives loans. Investment bank provides customer specific services however commercial bank provides standardized services. Investment bank has few customers, is more risk tolerant and get its earning from commission or profit from stocks, fees while commercial bank has more customers, is less risk tolerant and get its earning from interest and fees. The performance of investment bank usually based on financial and stock market performances but the performance of a commercial bank usually based on demand for credit and country’s economic growth.